Summaries of health policy coverage from major news organizations

HMO REFORM: Davis Plan Has MCOs, Businesses Concerned

Gov. Gray Davis' outline last week of managed care reforms acceptable to his administration has businesses, managed care organizations and industry trade groups in a dither. Their chief concerns, as described in weekend news coverage, include:

Cost: Some are worried that the package will lead to higher premiums, the Sacramento Bee reports. Cory Black, spokesperson for the California Association of Health Plans, said, "In addition to normal inflation, which looks like it will be 7 or 8% next year, you add increased costs and some of these (small businesses) are looking at 15% increases. In the past, that's forced a lot of them to drop coverage."

Decision appeals: Black finds Davis' proposed independent review system "worrisome" in that patients would be able to choose the reviewer they want, saying, "We think it should be a blind process."

Right to sue: Industry representatives are most concerned about Davis' plan to allow consumers to sue their health plans. Martyn Hopper, California director of the National Federation of Independent Businesses, said, "The concern that we have regarding liability is the issue of cost again, as in every other area where the trial lawyers want to expand liability. It's not considered on its merits. It's more of a feeding frenzy where lawyers want to go off on the frivolous cases. Generally speaking, when you allow people to sue, the lawyers love it but not many people do. That's the case in health care."

Davis spokesperson Hilary McLean said the governor is attempting to find a balance between consumer protections and cost. She said, "Certainly the governor does not want undue burdens on business. But he wants sensible reforms to the health care system that will benefit Californians. This is a framework of what the governor would like to see in an HMO reform package" (Glover/Young, 8/22). CAHP President Walter Zelman said, "I think it can be done, but it's not going to be easy" (Kerr, AP/Sacramento Bee, 8/23).

Solvency Baseline The Orange County Register reports that health groups have also expressed concern over the governor's proposed solvency requirements for health plans. Zelman said, "The governor is advocating more here than is necessary. Regulating relationships between contracting parties is not the business of government. Government doesn't step in and tell Safeway how to buy beer from Budweiser." Steven Thompson, the California Medical Association's vice president for government affairs, seemed to agree. He said, "We're not opposed to it, but it doesn't look like much of a solution. It looks like a lot of new bureaucratic standards that would add costs to medical groups that are going bankrupt without dealing with the reason they are in trouble" (Crabtree, 8/21).

No Go on Mandates The San Jose Mercury News reports that Davis' concerns about raising health care costs are manifesting themselves in his reluctance to approve coverage mandates. Legislators are currently peddling about 15 bills that would require coverage of "everything from birth-control pills and mental-health services to pain medication for dying patients and medical costs for patients in clinical trials." Zelman said, "Look, we don't want to oppose mental health (coverage). We realize that it is a real value in the comprehensive health care scheme. But we're just saying to the legislators, 'Be careful.'" But Davis, often bucking his Democratic colleagues in the Legislature, appears ready to be careful himself. He has said such measures could raise costs too much. His cabinet secretary, Susan Kennedy, said, "Who could possibly be against cancer screening? Who could be against diabetes coverage? But where do you draw the line?" (Jordan, 8/23).

Opinion Roundup The editorial pages have not been shy about their reaction to Davis' blueprint:

Sacramento Bee: "This is the kind of outline that, had the governor produced it last spring, would have guided a rudderless Legislature awash in a sea of HMO-related bills. ... Ignoring the reality that HMOs in California no longer directly make most medical decisions ... lawmakers preferred an orgy of bills that targeted HMOs as the villain. Many bills are still so broad that they would do far more harm than good" (8/22).

San Jose Mercury News: "It's a mixed bag, but in all, a good proposal. The biggest problem is that Davis waited until the waning weeks of the Legislature to turn his attention to health care in the first place. A matter of such supreme importance should have been on the front burner, as soon as his education package passed last winter, not sitting in the refrigerator while legislators introduced more than 70 health-related bills and moved them through hearings and floor votes. Much of that effort will have been wasted" (8/22).

Los Angeles Times: "By revising pending bills in the direction of the governor's specifications, legislators can transcend the impasse that stymied HMO reform through much of the 1990s, when a Democratic-controlled Assembly and Senate passed hundreds of measures that Republican Gov. Pete Wilson promptly vetoed" (8/23).

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